Starting something new is scary--especially if you're counting on it generating a profit to pay the bills. Creating a business can be nerve-wracking, but it also can be rewarding, both financially and emotionally. Here are 10 tips from Next-Gen 250 entrepreneurs on how to reap more of the rewards, and less of the anxiety.
1. Have a customer base to start. Often, that means working on the side to build business while you have a full-time job. "Always tee up your customer base, or you're going to be hurting longer than you should be," said Matt Lombardi, founder of Atlantic Metro Communications, Parsippany, N.J.
2. Not all money is created equal. Your choice of capital partner needs to be just as strategic as any other decision. That can be a tough piece of advice to follow, because when a company is just starting, especially when it's in the concept stage, it's hard to turn down money. However, many entrepreneurs find themselves regretting their early partners as they grow.
"All money isn't created equally. Entrepreneurs should vet capital partners just as much as they're being vetted -- what are their connections, what doors can they open, how can they help find the people, etc.," said Aric Bandy, CEO of Agosto, Minneapolis, Minn. "Lay out expectations on how your capital partners should help you drive the business forward, and hold them to it."
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3. Look for ways to get as much work as possible done with as few resources as possible. That doesn't mean being lazy; just the opposite. Starting a business means wearing many different hats for quite some time. For example, Henry Park started 3GC Group, Los Angeles, in 2004, but it wasn't until the end of 2006 that he hired a full-time, dedicated salesperson.
4. Hire carefully. Rock stars rarely pan out. As entrepreneurs reach a certain size, they need to bring in talent to get their business to the next level. "All too often, I've seen firms realize a weakness on their team--sales, marketing, operations, etc.--and solve it by hiring someone with a rock-star resume," Bandy said. "It seems like an easy solution, a silver bullet to solve an area that the entrepreneur isn't comfortable handling. I've made that mistake, and it rarely pans out."
Instead, build a team. Employees should complement one another. And, Bandy added, don't be afraid of unproven talent, a mistake large, established companies often make. Consider competence, capability and an ability to fit in with the team, and then look at the resume.
5. Lead. No one wants to work for or do business with someone who seems lost. However, not all entrepreneurs are born leaders. For those looking for guidance, Park recommends reading Dave Logan's book, "Tribal Leadership."
"I love that book, because when I got started, I needed guys with the same vision as I had, and the capability to grow that vision. Now, I look at it from a value standpoint: 'Do they have the same values as I do?' There are plenty of guys out there who are capable. But, now, on top of that, it's equally important to have the same values, for example, in terms of work ethic, family time and honesty."
NEXT: Five More Tips For Starting A Successful Business
6. Focus first on systems. Technology is the foundation of a solution provider's business. A successful company must ensure it has a strong, stable technology infrastructure early on. Not having to worry about whether things will actually work saves headaches and money later on, and that's a big advantage.
Often, startups will have one large partner that is critical to the fledgling firm's success. If the IT infrastructure can't meet the big customer's needs, it could lead to the end of the solution provider. Park found a large partner, Covad, which functioned as 3GC's de facto sales arm, pitching the solution provider's services as part of its hardware package. VARs should find partners that will sell their services, and then be certain the solution can be implemented reliably and economically.
7. Make sure clients' needs are met. Regardless of what is built or sold, you are a solution provider. That means your business is built first and foremost on personal relationships. "Our clients are everything," said Park. "We always check in with them, see what they need, update them with changes. When clients are asking about new technology, we are the first guys they ask." When customers are made to feel important to their solution providers, they are more apt to engage that VAR for future projects.
8. Understand the fine line between bleeding edge and cutting edge. Entrepreneurs such as Park invest in new technology. They forge relationships in the venture capital arena, find bleeding-edge technology, and research it from a finance and management standpoint. Park researches the company thoroughly, because it's crucial that the new company can execute well. By the time the company is vetted and brought on board, it has moved from "bleeding-edge" to "cutting-edge."
"Bleeding-edge technology can bleed you dry," said Park. "You can waste a lot of time, money [and] energy getting into bed with the wrong technology."
9. Leverage the cloud. The cloud levels the playing field for startup companies.
"You will be able to achieve scalability, elastic agility and focus on what really matters to your business: the business itself," said Vincent W. Mayfield, CEO of Bit-Wizards, Fort Walton Beach, Fla. "Nobody went into business to own a bunch of IT assets. Soon private data centers will be a luxury even the Fortune 2000 will not be able to afford. The cloud is a small and medium business equalizer. It gives every small business the ability to have a global infrastructure that they otherwise would never be able to afford."
10. Understand finances. Either have a good grasp of accounting, or bring in someone that does. It's a good idea that this person, while fitting into the team, also looks at the business differently than you. A different perspective can help identify issues that could turn into major difficulties down the road. "If the guy you bring in is just like you, you are going to face the same problems, and not recognize others," said Park. "Don't be afraid to see things differently."
It's important to know your strengths--and not forget your weaknesses. As Mayfield advised: "Know what you don't know; admit you don't know and get help."